Although the claimant was initially awarded mother's insurance benefits
and child's insurance benefits on behalf of her son on the decedent's
earnings record, the Social Security Administration (SSA) later determined
that the claimant's son was not a "child" of the decedent, as defined in
section 216(e) of the Social Security Act (the Act), and that the claimant
and her son had been overpaid $2,230.40. Section 216(h)(2)(A) of the Act
provides that in determining whether an applicant is the child of a
decedent, SSA shall apply the law governing the devolution of intestate
personal property of the state in which the decedent was domiciled at the
time of his death. When the decedent died, he was domiciled in South
Carolina. The law of South Carolina presumes that children born in wedlock
are legitimate. This presumption, however, may be rebutted by a
preponderance of evidence or by proof of incapacity. Although the claimant
and the decedent were married when the claimant's son was born, statements
from various prison officials show that the decedent was in prison under
constant armed supervision when the claimant's child was conceived.
Held, the evidence from the prison officials as to lack of access
rebuts the presumption under South Carolina law that the decedent is the
father of the claimant's son. Consequently neither the claimant nor her
son meet the statutory requirements for entitlement. Further held,
the claimant knew or should have known when she applied for benefits that
the decedent was not the father of her son; therefore, the claimant was at
fault in causing the overpayment, and the overpayment should be recovered,
as provided in section 204(b) of the Act.

JONES, Chief Judge:

The Plaintiff brought this action pursuant to Section 205(g) of the
Social Security Act as amended [42 U.S.C.A. § 405(g)] to obtain judicial
review of a final decision of the Secretary of Health, Education and
Welfare denying Plaintiff's claim for child's and mother's insurance
benefits and refusing to waive recoupment of the overpayment of such
benefits to Plaintiff. The matter is now before the Court upon the
respective motions of the Plaintiff to strike Exhibits 19, 20 and 21 from
the answer and transcript, and of the Defendant for judgment on the
pleadings. A hearing was conducted on these motions in Asheville on May 1,
1980 and after a careful consideration of the record, briefs and arguments
of counsel the Court now enters its findings and conclusions.

As the widow of the deceased wage earner, William C. Phipps, Plaintiff
Agnes Phipps applied for mother's insurance benefits, and on behalf of her
son, Joseph, applied for surviving child's insurance benefits, and on
December 22, 1976 (Rec. 41, 45). Initially, Plaintiff and her son were
awarded mother's and child's insurance benefits. However, pursuant to a
review of eligibility, the Social Security Administration determined in
November 1977 that such benefits should be terminated (Rec. 50, 51). In
December, 1977, Plaintiff requested that this termination be reconsidered
(Rec. 68). After reconsideration in August 1978, the Social Security
Administration determined that Joseph was not the child of the deceased
wage earner as defined in Section 216(e) of the Social Security Act, as
amended [42 U.S.C.A. § 416(e)], and consequently Agnes Phipps was not
entitled to mother's benefits due to her ineligible son (Rec. 78).
Plaintiff then requested a hearing and it was subsequently held on January
10, 1979 (Rec. 18, 19). The administrative law judge ruled on April 9,
1979 that Joseph Phipps was not entitled to child's insurance benefits
under Section 202(d) of the Social Security Act as amended [42 U.S.C.A.
§402(d)], that Plaintiff was not entitled to mother's insurance benefits
under Section 202(g) of the Act as amended [42 U.S.C.A. § 402(g)], and
that both Joseph and Plaintiff were overpaid benefits and that such
overpayment should not be waived (Rec. 7-12). The total amount of
overpayment for both Plaintiff and Joseph is $2,230.40 (Rec. 50, 51). This
finding became the final decision of the Secretary of Health, Education
and Welfare, when approved by the Appeals Council on September 19, 1979
(Rec. 3).

This Court's scope of review of the Secretary's decision is restricted to
a determination of whether the Secretary's findings are supported by
substantial evidence [42 U.S.C.A. § 405(g)]. When that determination is
made, this Court's review is complete. Estep v. Richardson, 459
F.2d 1015 (4th Cir. 1972).

William C. Phipps and Plaintiff were married on May 5, 1951 (Rec. 52,
53). They remained married until Williams's death on December 4, 1976
(Rec. 23, 44, 55, 56); however, during this period of marriage they only
lived together on a sporadic basis (Rec. 24, 31). On March 10, 1962
Plaintiff gave birth to a son, Joseph Phipps, and the birth certificate
lists William C. Phipps as the father and cites the pregnancy as being
thirty-six weeks in duration (Rec. 54). According to the Secretary and
various prison officials, William C. Phipps was incarcerated at the
Jackson County Prison Unit when Joseph was conceived (Rec. 69, 70). Prison
officials have stated that William C. Phipps was a convicted felon
confined to Jackson Prison which was a medium security prison where felon
inmates were under constant armed supervision (Rec. 69). William C. Phipps
began his confinement there on July 18, 1960 and because of his refusal to
follow orders and fighting he was demoted to a "C" grade prisoner and
denied all extra privileges (Rec. 70). In September, 1961 he was promoted
to "honor grade." Nevertheless, any assignment outside the prison would
have required the presence of an armed guard (Rec. 69).

Plaintiff has filed a motion to strike from the answer and transcript the
exhibits numbered 19, 20 and 21 (Rec. 69-70, 71- 72, 73-74). Exhibit 19
referred to above, consists of two statements made by a prison official
concerning the conditions of William's incarceration at the Jackson County
Prison (Rec. 69, 70). Plaintiff did not object to this exhibit at the
administrative hearing. Exhibits No. 20 and No. 21 are statements from
William's sisters, both denying that William ever acknowledged Joseph
Phipps as his son (Rec. 71-72, 73). At the administrative hearing
Plaintiff objected to these exhibits as being hearsay (Rec. 21). Plaintiff
did not exercise the available subpoena power to compel the appearance of
hearsay declarants or other witnesses for direct or cross-examination.

The Secretary is empowered and commanded under Section 205(a) of the
Social Security Act, as amended [42 U.S.C.A. § 405(a)] to adopt
regulations for the "nature and extent of the proofs and evidence" to be
used in establishing the right to Social Security benefits. Also the
Secretary is permitted to have hearings, receive evidence and to make
findings of fact and decisions as to the rights of any applicant. Section
205(b) of the Social Security Act, as amended [42 U.S.C.A. § 405(b)].
Furthermore, the Secretary is authorized to receive evidence at any
hearing regardless of its inadmissibility under the rules of evidence
applicable to court procedure.

Hearsay evidence is admissible in administrative hearings to determine
whether a claimant is entitled to social security benefits. Rocker v.
Celebrezze, 358 F.2d 119 (2d Cir. 1966); Bethlehem Steel
Corporation v. Clayton, 578 F.2d 113 (5th Cir. 1978). Furthermore, the
United States Supreme Court has held that hearsay is admissible in social
security administrative hearings and that such hearsay may be substantial
evidence supportive of a finding adverse to the claimant. Richardson v.
Perales, 402 U.S. 389, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971). Since
Plaintiff had the power to subpoena these witnesses and did not exercise
it, she is in no position to complain that she was denied the rights of
confrontation and of cross-examination. Richardson v. Perales,
supra. Since the evidence contained in Exhibits 19, 20 and 21 is
relevant and material to the issue of whether or not William C. Phipps was
the biological father of Joseph Phipps, it was properly admitted by the
administrative law judge.

Pursuant to Section 216(h)(2)(A) of the Social Security Act as amended,
[42 U.S.C.A. § 416(h)(2)(A)], the Secretary in determining whether an
applicant is a "child" is directed to apply the law governing the
devolution of personal property of the State of the wage earner's domicile
at the time of his death. Applicants who would have the same status as a
child for taking intestate personal property shall be "deemed" a child for
purposes of child's insurance benefits.

When William C. Phipps died he was living in Easley, South Carolina (Rec.
56), and had been living there with his mother since the separation from
Plaintiff in 1971 (Rec. 23, 71). Consequently, the administrative law
judge applied the law of South Carolina in determining whether or not
Joseph was William's son (Rec. 8).

The law of South Carolina presumes that children born in wedlock are
legitimate. Nevertheless this presumption of legitimacy may be rebutted by
a preponderance of evidence or by proof of incapacity. Tarleton v.
Thompson, 118 S.e. 451 (1923); The People's National Bank of
Greenville v. Manos Brothers, Inc., 84 S.E. 2d 857 (1954); Pooler
et al v. Smith, 525 S.E. 967 (1905).

Here there is no factual issue concerning the validity of William's
marriage to Plaintiff on May 5, 1951 or that it ended upon Williams's
death on December 4, 1976 (Rec. 52, 56). Also, there is no dispute that
Joseph was born on March 10, 1962 in Brevard, North Carolina or that the
length of pregnancy was thirty-six weeks (Rec. 54). Additionally, the fact
is undisputed that William was an inmate in the North Carolina Prison
System when Joseph was conceived (Rec. 25).

The Plaintiff testified at the hearing that when Joseph was conceived
William was in prison at Murphy (Rec. 25). The Court takes judicial notice
of the fact that Murphy is in Cherokee County. Plaintiff contends that,
after June of 1961 while William was at the Murphy Unit, he was made a
trustee or honor guard and was allowed to walk around the prison grounds
without a guard and to go the prison farm (Rec. 66). Plaintiff further
alleges that during one of her visits with William he left the prison farm
and met her at a secluded area near a river, and at this time Joseph was
conceived (Rec. 67). The Plaintiff denies having had sexual intercourse
with anyone other than William during his incarceration (Rec. 27).

The attorney for the Plaintiff also contends that when Joseph was
conceived, William was incarcerated in Peachtree Unit at Murphy, Cherokee
County, and that it was a misdemeanor camp with minimum security.
Plaintiff's attorney argues that William was housed at the Jackson County
Unit only long enough to be processed into the North Carolina Prison
System. In support of these allegations counsel for the Plaintiff
submitted, after the hearing was held on these motions, a letter dated May
9, 1980 from R. S. Moreland, Administrative Assistant with the North
Carolina Department of Correction, Division of Prisons. This letter states
that William C. Phipps was admitted to prison on July 18, 1960 to serve
two years for embezzlement. (Where he was admitted is unspecified.) Mr.
Moreland further states that on May 29, 1961 William was transferred to
Cherokee County and remained there until his discharge on January 14,
1962. Mr. Moreland does not state what custody classification the Cherokee
Unit had at this time but he does mention that William was promoted to
minimum custody in September of 1961.

Thus, even though the Plaintiff's attorney has asserted that the Cherokee
County Prison Unit was a minimum security facility and that Mr. Phipps was
under minimum security at the time of Joseph's conception, there is no
evidence to support these allegations. The only evidence presented by this
letter of May 9, 1980 is that Mr. Phipps was transferred to Cherokee
County on May 29, 1961.

The United States Attorney, after receiving a copy of this letter from
Mr. Moreland to Plaintiff's attorney, filed a reply on behalf of the
Secretary. Contained therewith is a copy of a letter from Mr. Moreland to
the United States Attorney dated June 13, 1980. In it, Mr. Moreland again
states that Mr. Phipps was admitted to the North Carolina Prison System on
July 18, 1960 to serve a two year sentence for embezzlement, that he was
transferred to the Cherokee County Prison Unit on May 29, 1961, that he
was promoted to minimum custody or Honor Grade in September, 1961, and
that he remained in this status until his discharge on January 14, 1962.
However, Mr. Moreland goes on to state in this June 13, 1980 letter, that
when Mr. Phipps was transferred to the Cherokee County Unit on May 29,
1961 he was classified medium custody. Additionally, Mr. Moreland relates
that Mr. Phipps would have normally been confined to the prison compound
unless he was assigned to a road squad during which time he would have
been under armed guard at all times.

Mr. Moreland's letter dated June 13, 1980 along with the letter and
statement of Mr. Baker (Rec. 69, 70), all support the finding of "positive
proof of incapacity" on the part of William during the time when
conception occurred. Joseph was born on March 10, 1962 and the length of
pregnancy was thirty-six weeks, that would place conception around June
30, 1961 and at that time Mr. Phipps was in medium custody and under armed
supervision. The conditions of his incarceration would have precluded him
from having any sexual relations with his wife and consequently he could
not have been Joseph's father. Therefore, the presumption of legitimacy
under South Carolina law was rebutted by the evidence of non access and it
supports the Secretary's finding that William was not the biological
father of Joseph. Also, the record contains the statements of Mary Owen
and Marie P. Mathis, William's two sisters, and they both certified that
William never acknowledged Joseph as his son.

Having found that Joseph is not the son of William, the conclusion
necessarily followed that Joseph was not entitled to child's benefits and
Plaintiff was not eligible for mother's benefits. The Secretary also held
that Joseph and Plaintiff were overpaid benefits based on the applications
filed by Plaintiff and that recovery of the overpayment should not be
waived.

The Secretary is authorized pursuant to Section 204(b) of the Social
Security Act, as amended [42 U.S.C.A. § 404(a) and (b)], to recover an
overpayment from any person who is at fault in causing it. In order to
avoid liability for the recovery of the overpayment, the recipient must
show first, that he is without fault in causing it and second, that
recovery of the overpayment would defeat the purpose of the Social
Security Act or would be against equity and good conscience. Morgan v.
Finch, 423 F.2d 551 (6th Cir. 1970); Social Security Act 204(b) as
amended [42 U.S.C.A. § 404(b)]. However, once there is substantial
evidence that the claimant was not without fault, there is no need to
proceed further and determine whether recovery would be against equity and
good conscience, or defeat the purposes of the Act. Morgan v. Finch,
supra.

In this case the Plaintiff, on her own behalf and that of her son, filed
applications for mother's and child's insurance benefits. After
considering the evidence furnished by prison officials and Plaintiff's own
account of conception the Secretary held that Joseph was not William's
child. Under these circumstances the Plaintiff knew or should have known
at the time the applications were filed that William was not Joseph's
father.

While the Court is sympathetic to the Plaintiff's plight, a review of the
entire record reveals that Plaintiff was not entitled to mother's
insurance benefits and Joseph was not entitled to child's benefits because
he was not the child of the deceased wage earner, within the meaning of
the Social Security Act. Also, the Plaintiff was not without fault in
applying for child's and mother's insurance benefits under the Act.
Therefore the conclusion of the Court is that the Secretary's decision
rests upon substantial evidence and the Defendant's motion for judgment on
the pleadings should be allowed, and the recoupment of the overpayment
should not be waived.

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